TMI Blog2020 (10) TMI 1334X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer of Property Act, 1882, Immovable property does not include standing timber, growing crops or grass . The impugned item 'lift' merits classification as 'plant and machinery' and since 'plant and machinery' is excluded from the term 'immovable property', for the purpose of 17(5) (d), again appellant has pleaded that the plant and machinery includes certain foundations and structures however certain structures and foundations are excluded from Plant and Machinery and these are, land, building or any other civil structures, telecommunication towers and pipelines laid outside the factory premises - the lift installed in the building for the purpose of furtherance of business cannot be deemed to be a part of the building or an immovable property just because of the fact that it was fastened in the civil structure of the building by way of nuts, bolts and fasteners. Further, the lift so installed in his Hotel is not a customized lift but a pre-designed lift. These lifts require a specified area in a building and can easily be installed by fastening nut and bolts and other fasteners in the building and no specific modification or alteration is req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be multi storied hotel and will have approx. 100 rooms. The hotel will be equipped with other facilities such as gym, spa, swimming pool, restaurant, banquet hall, marriage lawn and garden etc. As there will be some rooms of the hotel which would have declared tariff of more than Rs. 7500 and hence the restaurant of the hotel will be chargeable to GST @ 18% instead of 5% and would be eligible for GST ITC of items used in the course or for the furtherance of restaurant services. As the hotel is multi storied, hence to provide facility to guest we would be requiring lift in the hotel premises. Section 16 [Chapter V] of CGST Act 2017 lay down the conditions specified for claiming Input Tax Credit. Lift, that will be purchased, will fulfills all the conditions of section 16. An application was filed by the assessee before Authority of Advance Ruling, AAR, on 13.11.2019, wherein the authority ordered negatively as i.e. input credit of lift is not eligible. Aggrieved by the order passed by Authority of Advance Ruling, Madhya Pradesh dated 08.06.2020 this appeal is preferred. 5. QUESTIONS RAISED BEFORE AAR Relevant question which has been decided against ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. goods or services or both received by a taxable person for construction of an immovable property ( other than plant or machinery ) on his own account including when such goods or services or both are used in the course or furtherance of business. Explanation 1 - For the purposes of clauses (c) and (d), the expression construction includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property; Explanation 2 - For the purposes of this Chapter and Chapter VI, the expression plant and machinery means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- i. building or any other civil structures; ii. telecommunication towers; and iii. pipelines laid outside the factory premises. 1.2. The above explanation 2 can be summed up as under- Plant and Machinery includes: Immovable Property includes: 1. apparatus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport thus, that structural support is plant and machinery but the lift which is a plant and machinery but since installed in building, the lift per say becomes part of building. Hence, it required to be examine as to whether a lift is an immovable property (i.e., part of a building) or whether it could be regarded as 'plant and machinery'. 2. DISCONSIDERATION OF LIFT AS AN INTEGRAL PART OF BUILDING- 2.1. Immovable property has been defined as under: 2.1.1. CBEC Circular Number 58/1/2002-CX, dated 15/1/2002 where in para (e) it has been clarified that If items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered as movable and will, therefore, not be excisable goods. 2.1.2. Definition of Immovable Property in Clause 3(26) of General Clauses Act. 1887 Immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. 2.1.3. Definition of attached to earth in Section 3 of Transfer of Prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to secure maximum operational efficiency and also for safety. Supreme Court held that in view of those findings it was not possible to hold that the machinery assembled and erected by the appellant at its factory site was immovable property as something attached to earth like a building or a tree. The test, it was noted, would be whether paper-making machine could be sold in market and as Tribunal had found as a fact that it could be sold, so machine was held to be not a part immovable property of the company. 3.2. Commissioner Of Central Excise, ... vs Solid Correct Engg. Works Ors on 8 April, 2010 - Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 1 = feet deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in earth of the plant as in the case of walls and buildings, for the obvio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the attachment was not for more beneficial enjoyment of either the soil or concrete. Attachment in order to qualify the expression attached to the earth, must be for the beneficial attachment of that to which it is attached. Doors, windows and shutters of a house are attached to the house, which is imbedded in the earth. They are attached to the house which is imbedded in the earth for the beneficial enjoyment of the house. They have no separate existence from the house. Articles attached that do not form part of the house such as window blinds, and sashes, and ornamental articles such as glasses and tapestry fixed by tenant, are not affixtures. 3.2.3. It is noteworthy that in none of the cases relied upon by the assessee referred to above was there any element of installation of the machine for a given period of time as is the position in the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s erection and installation, this Court held that the same was immovable property which could not be shifted without dismantling the same. 4.2. Essar Telecom Infrastructure Pvt. Ltd. (supra)on Mobile Towers by Karnataka High Court, which differed with the view of Bombay High Court's judgment in Hutchison Max Telecom P Ltd [(2008) 224 ELT 191 (Bom)]. However mobile towers are standalone entities erected usually on roof-tops after an agreement with the owner of the building for using the space for a limited period of time, subject to periodic renewals. On the other hand, the Tower Package involves the erection of a series of towers on acquired land for use in perpetuity. In contrast to the time-bound nature of the agreements for using building spaces for erecting mobile towers, the Tower Package is not being constructed with the contemplation of such relocation. The judgment of Karnataka High Court in the matter of Essar Telecom Infrastructure P. Ltd. (supra) is, therefore, not applicable in the present context. 5. Further, the lift so installed in our Hotel is not a customized lift but a pre-designed lift. These lifts require a specified area in a building and can easi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input tax credit shall not be available in respect of the works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. As per Section 17 (5)(d) of CGST Act 2017, ITC shall not be available for any goods or services used by a taxable person for the construction of immovable property ( other than Plant Machinery ) on his own account even when used in course or furtherance of business. Explanation: Construction includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization . to the said immovable property. Please note that 'alterations' and 'repairs' are also included in this definition if capitalized. 7.3. IMMOVABLE PROPERTY UNDER EXCISE ACT - The Excise duty was a duty levied on manufacturing of movable goods, the test of movable and immovable goods is as under- 7.3.1. If items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the item would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the appellate authority are clearly erroneous. 7.6. Further, the following judicial pronouncements permit claim of CENVAT credit on goods or services or both used in fabrication of parts, components, accessories of the plant and machinery. It has been consistently held that the parts, components, accessories come into existence before the installation of the machinery and credit of taxes paid on the same cannot be denied even if they become part of the immovable property after installation of the plant and machinery. 7.6.1. Commissioner of Central Excise Service Tax vs. India Cements Ltd. 2014 (310) E.L.T. 636 (Mad). 7.6.2. Commissioner of Central Excise Jaipur vs. Rajasthan Spinning Weaving Mils Ltd.2010(255) ELT 481 (S.C.) 7.6.3. Saraswati Sugar Mill Vs. Commissioner of Central Excise Delhi III 2011 (270) E.L.T. 465(S.C.) 8. Contrary Judgement- Contrary Judgment of AAR, Madhya Pradesh on the same issue has been given in case of M/s Atriwal Amusement Park (2020) 04 CCH GST 0445 AARMP (Copy of the same has been enclosed). Where AAR have concluded that water slides are apparatus, equipment or plant and machinery attached to foundatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on his own account including when such goods or services or both are used in the course or furtherance of business. The definition of immovable property is not provided under GST Act. According to section 3 (26) of the General Clauses Act, 1882, Immovable property shall include land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth . According to section 3 of the Transfer of Property Act, 1882, Immovable property does not include standing timber, growing crops or grass . In his submission appellant has argued that the impugned item 'lift' merits classification as 'plant and machinery' and since 'plant and machinery' is excluded from the term 'immovable property', for the purpose of 17(5) (d), again appellant has pleaded that the plant and machinery includes certain foundations and structures however certain structures and foundations are excluded from Plant and Machinery and these are, land, building or any other civil structures, telecommunication towers and pipelines laid outside the factory premises. The officer misinterpreted the above explanation and concluded t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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